What is a mandatory arbitration clause?
A mandatory, pre-dispute arbitration clause requires you to waive your right of access to the courts, and submit any claims to a costly private legal system selected by the defendant. These clauses are found in many types of contracts: employment, credit, telecommunication services, insurance, and franchise agreements, to name a few. Individuals seldom know that they are subject to these clauses. They may be contained in the fine print of a contract a consumer signs, e.g. a car lease or HMO enrollment form. A consumer may become subject to the clause after being sent a “bill stuffer” with a credit card or cell phone statement—by using the credit card or phone, the consumer is deemed bound. A clause may take affect when a worker is given an “employee handbook” after accepting a new job, or even an interoffice memo at a current job. Mandatory, pre-dispute arbitration clauses are distinct from voluntary, post-dispute agreements to arbitrate. Post-dispute agreements are made after a party
